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Yellowcake benefits from higher uranium price

Yellowcake benefits from higher uranium price – Yellowcake has published results covering the year to the end of March 2019. Highlights are:

  • Net asset value of USD2.93 (GBP2.25) per share as at 31 March 2019;
  • Value of underlying U(3) O(8) has increased by 22% to USD217.4 million as at the end of March 2019 relative to acquisition cost of USD178.2 million;
  • Purchase of 8,441,385 lb U(3) O(8) from National Atomic Company Kazatomprom JSC during the period at an average cost of USD21.10/lb against a spot price as at the end of March 2019 of USD25.75/lb;
  • Steady improvement in the market for U(3) O(8) , with the spot price increasing 13% from USD22.85/lb at IPO to USD25.75/lb at the end of March 2019;
  • Profit after tax of USD29.7 million for the period ended 31 March 2019;
  • Since the end of March 2019, the company has raised an additional GBP25.9 million (approximately USD33.9 million) through a placing of shares and acquired an additional 1.175 million lb uranium;
  • Net asset value as at 31 May 2019 of USD2.70 (GBP2.14) per share or US$238.2 million, consisting of 9,616,385 lbs of U(3) O(8) valued at a spot price of US$24.10/lb, a derivative liability of US$2.8 million and other net assets of US$9.2 million.
Andre Liebenberg, CEO of Yellow Cake, said; “I am pleased to present our maiden set of full year numbers.  We have been active in the market, acquiring additional uranium on three separate occasions following our admission to the AIM market, taking our total uranium holdings to nearly 10 million pounds, in line with the strategy we set out at the time of our IPO. We continue to believe that the uranium market is structurally mis-priced and that prices will continue to rise in the long-term. Despite some continued volatility, market activity has justified our investment proposition, with the spot price increasing by 13% from USD22.85/lb at our IPO to USD25.75/lb at the end of March 2019. We continue to offer investors exposure to the uranium spot price without the operating risks associated with exploration, development and mining, and the market dynamics underpinning our thesis remain robust.”
The chairman, The Lord St John of Bletso, said “The underlying uranium market fundamentals remain supportive of our thesis that uranium prices are structurally undervalued and that this is an opportune time to invest in physical U3O8. Nuclear power is the least expensive low-carbon power option in terms of cost per megawatt hour (MWh) and, according to the World Nuclear Association, remains one of the lowest sources of lifecycle carbon emissions per MWh, producing lower carbon emissions than both solar and biomass energy sources. With global demand for clean and cheap energy continuing to grow, nuclear power is expected to remain a key component of the global energy mix. Uranium production has been curtailed at a number of operations and current uranium prices disincentivise new mining investments, which is expected to translate into a growing mine supply gap over time.”
[Our note on Geiger Counter explains the drivers of the uranium market in some detail]

YCA : Yellowcake benefits from higher uranium price

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